Expat Forum For People Moving Overseas And Living Abroad banner

Status
Not open for further replies.
1 - 17 of 17 Posts

·
Registered
Joined
·
5 Posts
Discussion Starter · #1 ·
I have looked through loads of information on this site and elsewhere, but I was wondering if a few of you lovely expats would be able to answer some questions based on my family's situation.

I am American, married to a Brit, and have a 1 year old. We both make our income through online media.

Does anyone have experience making money outside of France, that is mostly not taxed? Most of our income will be going into a foreign account. Should we open an account in France and transfer the money there for tax purposes? Or can we file income tax with our foreign bank statements? Is auto-entrepreneur the best way to go?

Since we are self employed and will most likely have private insurance, do we only pay income tax and house tax, or do we have to pay the social tax as well?

I know my profile says expat in Spain, looking there as well, although the husband prefer's France. :) Thanks for any information.
 

·
Administrator
Joined
·
50,434 Posts
When you are resident in France, you must declare and pay tax on your worldwide income. There are generally provisions to avoid double taxation if any of your income is taxed in another jurisdiction - but you declare everything, no matter where you do your banking. You also must declare all foreign (i.e. outside France) bank accounts and all foreign "assurance vie" contracts (basically investment accounts).

There isn't really a notion of "self-employment" as such in France. Your business must be registered under one of the (many!) statuts and part of that registration is signing up with the social insurances and, as necessary, VAT offices.

Auto-entrepreneur is only available to individuals (i.e. you and your husband would have to each have your own AE entity) and only when turnover (gross revenues before any expenses are deducted) is less than a specific ceiling. Details of the AE scheme are here: Portail officiel des auto-entrepreneurs But as an AE you are expected to pay into the social insurances at a flat rate (based on revenue, not net income). There are changes to the AE system coming into effect next year that you may want to take into consideration.

Basically, the AE system is designed to foster start-up businesses for their first few years until they can register as a "real" company (and start paying VAT) or for side businesses. The changes announced are specifically to discourage the long-term use of the AE scheme for a person's primary source of income.

If you aren't eligible for the AE scheme, you will be expected to set up a regular business, probably something like an SARL, which involves filing annual financial statements and paying regular payroll taxes (social insurances). There is information about these options on the website of the CCI (Chambres de Commerce et d'Industrie) in the various departements.
Cheers,
Bev
 

·
Registered
Joined
·
4,273 Posts
Since we are self employed and will most likely have private insurance, do we only pay income tax and house tax, or do we have to pay the social tax as well?
If you come to live and work in a socialist country, you can't then expect to be allowed to opt out of the society you have chosen to live in and the social taxes that go with it! You will pay social charges based on your income, same as everyone else. If you choose to get private insurance instead of using your entitlement to the state system, that's up to you.

As said, as residents of France all of your income, from whatever source in whatever country, must be declared in France and will be taxable as per French tax law, subject to any dta's. However, if all your work is done on the internet from your home in France and a French ISP address, it's not immediately obvious why any of the income would be taxable anywhere other than France. You don't have to put all the money through your French bank account; provided that you keep accurate records that can be inspected on request it doesn't really matter where the papertrail ends up. However, on your tax return you will of course have to declare everything in euro.

Do make sure you have a clear picture of the cost of being self-employed/running a business in France before you go ahead. I don't know about in the US but business taxes are far, far higher in France than in the UK and many British expats find the charges and the red tape hard to digest, as no doubt you've read many times on the forums.
 

·
Registered
Joined
·
25 Posts
If you come to live and work in a socialist country, you can't then expect to be allowed to opt out of the society you have chosen to live in and the social taxes that go with it! You will pay social charges based on your income, same as everyone else. If you choose to get private insurance instead of using your entitlement to the state system, that's up to you.

As said, as residents of France all of your income, from whatever source in whatever country, must be declared in France and will be taxable as per French tax law, subject to any dta's. However, if all your work is done on the internet from your home in France and a French ISP address, it's not immediately obvious why any of the income would be taxable anywhere other than France. You don't have to put all the money through your French bank account; provided that you keep accurate records that can be inspected on request it doesn't really matter where the papertrail ends up. However, on your tax return you will of course have to declare everything in euro.

Do make sure you have a clear picture of the cost of being self-employed/running a business in France before you go ahead. I don't know about in the US but business taxes are far, far higher in France than in the UK and many British expats find the charges and the red tape hard to digest, as no doubt you've read many times on the forums.
Unfortunately, Americans are required to pay taxes no matter where they earn their income or if they already pay taxes in another country. Home of the free.:crazy:
 

·
Registered
Joined
·
5 Posts
Discussion Starter · #5 ·
Thanks so much for the information. I am in no way trying to avoid the taxes, I just thought that social tax was taken from your pay if you are employed in France.

And yes it's true that I have to file a tax return in the US even though I haven't lived there in 5 years!

Good to know about self-employment in France, didn't realize it was so difficult. We make a good amount of money (enough to live in France comfortably) and own a few hotels in Cambodia which would also provide income. I'm still not sure how much of our income would go directly to tax, but I guess I'll find out when visiting an accountant in France next year.
 

·
Administrator
Joined
·
50,434 Posts
Thanks so much for the information. I am in no way trying to avoid the taxes, I just thought that social tax was taken from your pay if you are employed in France.

And yes it's true that I have to file a tax return in the US even though I haven't lived there in 5 years!

Good to know about self-employment in France, didn't realize it was so difficult. We make a good amount of money (enough to live in France comfortably) and own a few hotels in Cambodia which would also provide income. I'm still not sure how much of our income would go directly to tax, but I guess I'll find out when visiting an accountant in France next year.
Just how much goes to "tax" (i.e. social insurances) is kind of dependent on your precise set-up. As an AE, you pay in something like 23% of your gross revenues (i.e. before any deduction for expense). In a "regular" business entity (SARL for example), you pay your social insurances based on your net income (i.e. revenues less your business expenses - but subject to a certain minimum). It's possible to set things up so that one of you is actually an employee of your company, and thus the company pays the bulk of your social insurances.

If you're going to be talking to an expert comptable, you may also want to schedule a tour by the CCI of the departement where you would like to live. They usually have a section devoted to people trying to set up their own businesses and they have lots of resources available for little or no cost.
Cheers,
Bev
 

·
Registered
Joined
·
4,273 Posts
We make a good amount of money (enough to live in France comfortably) and own a few hotels in Cambodia which would also provide income. I'm still not sure how much of our income would go directly to tax, but I guess I'll find out when visiting an accountant in France next year.
Another thing to check up on is if you would be liable to pay CSG on the hotel income, I presume CSG applies to non-EU immigrants as well as EU? Contribution Sociale Généralisée is a much hated tax amongst expats who are liable for it. It's levied in addition to income tax on unearned and foreign income, and basically it goes towards paying off France's national debt and helping the government balance its books. It's payable by everybody who is covered by the French social security system direct, but not by people who have private health insurance or are covered by another country's social security regime.
 

·
Administrator
Joined
·
50,434 Posts
It's payable by everybody who is covered by the French social security system direct, but not by people who have private health insurance or are covered by another country's social security regime.
Are you sure about that? I seem to recall that Americans on US pensions wind up paying CSG on their pension income. (Though that may have changed in the last few years.)

Another route for information about taxes and particularly how they impact US citizens living in France - AARO - Association of Americans Resident Overseas You have to be a member to get their publications, but they do run a tax seminar in about February or so that is open to the public. Could be an interesting way to get some tax advice/information from a slightly different perspective than a local accountant.
Cheers,
Bev
 

·
Registered
Joined
·
4,273 Posts
Are you sure about that? I seem to recall that Americans on US pensions wind up paying CSG on their pension income.
I don't know all the ins and outs, and I don't know if it's the same for EU and non EU expats. Would Americans on US pensions get their healthcare privately or direct from the French system? I've seen several posts about expat Brit retirees on S1s who have been charged CSG and have successfuly contested it and been refunded on the grounds that they are on S1s or have private health insurance and therefore France is not directly responsible for their healthcare - there is a document available somewhere on the internet that they quote to support their appeal. But there could be more to it than that, maybe there is an agreement between the UK and France. I just keep on realising how much easier France is for us EU expats compared to our transatlantic cousins, hats off to you all for persevering, I'm sure there would be far fewer Brits here if we had to do as much research and planning and preparation.
 

·
Banned
Joined
·
6,806 Posts
... I just keep on realising how much easier France is for us EU expats compared to our transatlantic cousins, hats off to you all for persevering, I'm sure there would be far fewer Brits here if we had to do as much research and planning and preparation.
... which might be no bad thing ;)
 

·
Registered
Joined
·
1 Posts
What is the tax requirement for retirees living on Social Security and interest income? I thought I read somewhere that we paid tax in one country or the other...not both.
 

·
Administrator
Joined
·
50,434 Posts
Basically, yes, you pay income tax to one country or the other - usually to the country the pension or interest income is coming from. But you declare the income on both your US tax returns and your French tax declaration. The French declaration has a special form for providing the detail about foreign source income (i.e. US social security and/or interest from accounts in the US), including any income taxes paid on that income to the US.

The CSG, unfortunately, is not considered an income tax, but rather a "cotisation" - and last I knew was levied against just about all forms of foreign source income, including US social security benefits. However, if you check with the folks at AARO, they may have more information about this.
Cheers,
Bev
 

·
Registered
Joined
·
17 Posts
Auto-entrepreneur is only available to individuals (i.e. you and your husband would have to each have your own AE entity) and only when turnover (gross revenues before any expenses are deducted) is less than a specific ceiling. Details of the AE scheme are here: Portail officiel des auto-entrepreneurs But as an AE you are expected to pay into the social insurances at a flat rate (based on revenue, not net income). There are changes to the AE system coming into effect next year that you may want to take into consideration.

Basically, the AE system is designed to foster start-up businesses for their first few years until they can register as a "real" company (and start paying VAT) or for side businesses. The changes announced are specifically to discourage the long-term use of the AE scheme for a person's primary source of income.


Cheers,
Bev

Bev,

You mention that some changes are coming into effect next year - do you have any more information on what these might be please? I've heard rumours that the AE system is becoming a bit of a victim of its own popularity but am hoping it sticks around as it's perfect for my situation. I plan on continuing my copywriting work as well as doing some English teaching. If I never foresee this turning into a "small-business" which I don't, can I not just continue as an AE for as long as I want? I understand there's a cap on my income, but I don't anticipate going over that based on my part time hours. As long as I stay within the confines of those salary limits, will there be a problem?

Louise
 

·
Administrator
Joined
·
50,434 Posts
The main change that appears to be in the works is a sort of double cap on the revenue you can include under the AE scheme. Currently, for a service business, you are limited to something like €32K or €34K a year. Remember - this is gross revenue, net turnover, NOT net income.

But under the new rules that are supposed to take effect for 2014, if your revenue exceeds €19K for two consecutive years, you will have to convert your business to a regular business form (EURL, EIRL or something similar).
Cheers,
Bev
 

·
Registered
Joined
·
4,273 Posts
I've heard rumours that the AE system is becoming a bit of a victim of its own popularity but am hoping it sticks around as it's perfect for my situation. I plan on continuing my copywriting work as well as doing some English teaching. If I never foresee this turning into a "small-business" which I don't, can I not just continue as an AE for as long as I want? I understand there's a cap on my income, but I don't anticipate going over that based on my part time hours. As long as I stay within the confines of those salary limits, will there be a problem?
That is exactly my situation, Louise.
I believe AE is scheduled to be debated again in January, there are various proposals but it is still up in the air. Possibly the biggest changes will be for artisans. It is looking unlikely but not impossible that prof lib will be limited in time, and a bit more likely that the earnings ceiling will be lowered.

A good way to keep up to date with developments is at Les poussins : Mouvement de défense des auto-entrepreneurs - and please sign the petition while you're there, if you haven't already!
 

·
Registered
Joined
·
4,273 Posts
Sorry - professions libérales. The categories are artisans, commerçants and professions libérales. Each category has its own earnings limit, cotisation rate etc. Your activities would come under professions libérales.
 
1 - 17 of 17 Posts
Status
Not open for further replies.
Top